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"We agree with him that politicians need to better support people who work for themselves.

"But the way to do that isn't by hiking their tax bills."

Hammond’s Budget u-turn should be welcomed but it shows how out of touch the government is, affirms the boss of one of the world’s largest independent financial advisory organisations.

Andy Willox, Federation of Small Businesses Scottish policy convenor, said the Chancellor now realised ''that it doesn't make sense to squeeze the nation's strivers while trying to deliver a business boom''

The chief executive of the deVere Group, Nigel Green, also spoke out after the Chancellor dropped plans to increase the taxes paid by the self-employed.

Green said: “This is a stunning U-turn by the Chancellor, just a week since his Budget. Whilst we welcome this climbdown, it does show just how out of touch this government is with Britain’s hardworking, already-squeezed and over-taxed entrepreneurs – the lifeblood of the UK economy.”

He continued: “Hiking taxes on the self-employed would have only served to punish ambition and undermine aspiration to get on in life.

“This grinding U-turn is now a golden opportunity for this government to go one step further and better incentivise those self-reliant individuals who take on the responsibility, risk and burden of setting up companies and creating jobs and wealth. This is perhaps more important than ever as Britain prepares to launch divorce proceedings from the EU.

“Surely, if the UK is to thrive outside the EU, it should be aiming to keep and attract more entrepreneurial self-starters."

The Forum of Private Business welcomed the Chancellor's reconsideration of his plans.

Ian Cass, chief executive of the Forum, said: "The Forum has long lobbied for a simplified tax system and continues to do so.

''This does not necessarily mean that the National Insurance paid by the self employed should be the same as those paid through PAYE. Self employed business owners do not benefit from the likes of holiday pay and sick pay for instance, and take personal financial risks as they add to the growth of the economy and create jobs.

''All of these aspects should be considered as the government reviews the whole tax landscape. We will continue to push for simplicity, transparency and fairness."

Susie Simpson, partner and head of private business for PwC in Scotland, said the U-turn would be welcomed by the one-in-nine Scots who would potentially have been impacted by the Chancellor’s Budget announcement

"There has been a rise of around 11% in Scottish self-employment since 2008,'' she said. ''Many of these would have found themselves thousands of pounds worse off as a result of the proposed changes.

“It may not be such good news for the Chancellor and his team who have to now work out how to raise income from other streams but the self-employed will be happy to see the government U-turn on this announcement.

​“This is especially good news for some sectors in Scotland, like technology, catering​,​ media and life sciences ​- really any sector with high growth start/ups and scale ups​ - ​and may also encourage people, who in the last week paused plans ​ for becoming self-employed, to go ahead.

''Those in areas like Dundee and Edinburgh which have a high-number of startups and scaleups will be especially relieved.

​"What we need to see now is greater clarity from the UK Government ​and The Treasury around definitions of employment - for both businesses and individuals - as well as greater debate and advance notice for changes. There will also be a lot of expectation around the Taylor Report, expected in the summer, and the Autumn Statement."

TUC general secretary Frances O'Grady said there was now a real opportunity for the Chancellor to look at how self-employed workers can be treated more fairly.

"The Government should start by looking at the tax advantages which encourage bad employers to push people into bogus self-employment,'' said O"Grady.

Stephen Herring, head of taxation at the Institute of Directors, said the National Insurance ''saga'' could only be described as chaotic.

"The irony is that there are good reasons to look at levelling the playing field for employees and the self-employed, as the tax on direct employment is disproportionately higher,'' said Herring.

"However, it would have been much better if, as the IoD had suggested, the government had waited for the conclusions of its own review of modern employment, and reformed wholesale how different forms of work are taxed.

"Instead they announced they would raise one tax in isolation, only to cancel it a week later.

"Successive governments have acknowledged that the growth in self-employment has implications for tax revenues, but not one has wanted to take the political risk of undertaking real long-lasting reform."

Adam Marshall, director general of the British Chambers of Commerce, said: "The NICs rise, together with the cut to dividend tax-free allowances, was not viewed favourably by entrepreneurs - so this move and pause for thought are welcome.

"It would be far better to look at business and employment taxation in the round, to ensure that our tax system is competitive and equitable."

Ed Molyneux, co-founder and chief executive of micro-business accounting software developer, FreeAgent, said raising National Insurance contributions, “could have been potentially devastating for the UK’s freelancers and contractors.”

He added: “These types of businesses are the backbone of the UK economy and need to be supported - not viewed as an easy target by the government.

“It is very unfair to position freelancers and contractors as not being on a level playing field with those who are employed.

“These business owners have none of the employment rights or the security that employed workers do and there must be some recognition for that, unless the government wants to cripple this very important and growing part of the UK economy.”